taken center stage on the political radar. In particular, candidates Bernie Sanders,

and Hillary Clinton, have rallied against Wall Street’s disproportionate influence

in the US and global economy. So, just how powerful is Wall Street?

Well, in common use, “Wall Street” refers to the American banking industry. The term

is used because Wall Street in New York City is the location of significant financial markets,

including the NASDAQ and the New York Stock Exchange. These two markets are the largest

exchanges in the world, and facilitate the trade of more than $27 trillion dollars of

company stock. Changes in the global economy are directly reflected in the performance

of these stock markets, and vice-versa.

But stock market capitalization isn’t necessarily a measurement of power, as that money is actually

held by investors and not specifically Wall Street banks. By comparison, US financial

institutions hold roughly $15 trillion dollars in assets, half of which is controlled by

just five banks. That’s almost the United States’ entire yearly GDP; the largest in

the world.

So what does Wall Street do with that money? Well, a significant portion of it goes towards

swaying political policy. A 2009 study by the Center for Economic and Policy Research

found that banking deregulation in the United States was heavily pushed by banks themselves

by way of financial lobbyists. Deregulation in the 1970s and 1980s was based on the idea

that removing government oversight of the financial system would allow it to flourish,

and Wall Street’s profits would trickle down to Main Street.

In fact what ended up happening was that financial deregulation allowed banks and lenders to

take on riskier loans, as well as bet on the stock market using customer money. This all

came to a head during the late-2000s financial crisis, where it came out that poorly regulated

banks were offering massive mortgages to people who were unable to pay them. So when the housing

market finally collapsed under the weight of these bad loans, it took down the world’s

financial markets as well. In short, Wall Street’s practices contributed to the downturn

in the global economy. That’s pretty powerful.

But what’s even more powerful is what happened next. Instead of letting the affected financial

institutions fail under the weight of their bad loans, they were bailed out with public

money. The Treasury department committed roughly $16 trillion dollars, a bailout led by Henry

Paulson, the Secretary of the Treasury. Paulson was also the former CEO of Goldman Sachs,

which received nearly $13 billion dollars as part of the bailout.

Clearly, Wall Street has a huge amount of money, a huge amount of influence, and even

former CEOs in government positions. So when candidates like Bernie Sanders promise to

take down Wall Street, it may sound like a good idea, but it's probably harder than you’d

think.

But why exactly does Bernie Sanders want to take down big banks, and what’s so bad about

them anyway? Learn more about the problem with banks being “too big to fail” in

this video. Thanks for

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